4 Financial Milestones for Students: Debt-Free, Work-Free, Financially Free

airplane over world map on blackboard

Being able to never have to work again is the ultimate personal finance goal for many. Most people dream of the day when they can mail in their two weeks and never see their boss’s face again. But, in reality, this day is still quite far away for the majority of working-class citizens (and even more so for students.) Because of this fact, too many people give up before ever making any meaningful progress. Too many people REMAIN stuck in the rat race.

Financial milestones are the solution to this problem. Setting goals for yourself and hitting them can keep you motivated to stay on track for the long run. In this post, I go over 4 major financial milestones that will satisfy your ego but also keep you working hard so that you can eventually hit your own personal finance goals. Let’s jump right in!

Wealth is Time Not Money

In Robert Kiyosaki’s famous book “Rich Dad Poor Dad“, he talks about the true meaning of wealth. I don’t have the quote but the gist of it is: wealth isn’t measured in money, it’s measured in time.

Basically, your wealth is how long you can live if you quit your job RIGHT NOW. If you have $100,000 and your monthly expense is $10,000, your wealth is 10 months. Conversely, if you have $1 MILLION, but you need 500k per month to live, your wealth is only 2 months. So in this scenario, the latter person would be LESS wealthy than the former, not the other way around.

This is important to note, as all 4 of the financial milestones listed below aren’t hinged on a certain dollar figure. I could say you’re “financially free” once you have $4 million dollars in your bank account, and that’d probably be true TODAY for a lot of people. BUT, there are so many ways that I could also be wrong:

  • Inflation over the years can subtract from the value of today’s money
  • The person who has monthly expenses of $6000/month might be financially free with $4 million, but it’s a drastically different picture if you’re spending $20,000/month

So, the milestones I’m listing won’t be dollar figures but rather certain criteria that is different for every person. That being said, I will throw out some ball-park figures that will apply for MOST people in 2021.

4 Financial Milestones for Students

Here are 4 of the most important financial milestones for anyone in life (but especially crucial to students as you have a huge headstart):

No More Debt (Debt-free)

The first financial milestone for students (and anybody to be honest) is becoming debt-free. It’s impossible to build wealth when you owe money to other people and need to pay hefty interest payments on your loans. Consequently, you should celebrate when you finally become debt-free!

For students owing 10k – 60k in student loans, this might take you anywhere from 1-5 years to accomplish, but here are some things that might speed up the process for you:

  1. Pay your debt off BEFORE you do anything else with your money
  2. Stay AWAY from credit card debt (you can still use credit cards, just don’t add more debt to your pile of student loans)
  3. Cut living expenses hard until you’re debt-free

For most students, being debt-free is a huge source of relief, so you should focus on getting there are soon as possible.


You’ll know you’ve hit this goal when all your loan/debt accounts show a big fat 0. Once you’ve got that, it’s time to move on to the next financial milestone.

Built Up Emergency Fund (Work-free)

After you’ve paid off all your loans, the next big milestone is having a solid emergency fund saved up.

Too many people live paycheque to paycheque relying on their job as the only thing sustaining them. If they were to lose their job tomorrow, they would instantly be in big trouble. Because of this, they are chained to their job and can’t even take time to explore other options. It’s hard to build financial freedom when you’re in this situation.

Building up an emergency fund will help solve this issue. Ideally, your emergency fund will cover 6-8 months of your living expenses, so even if you lose your job, you’ll be fine for a while. This is what I call “work-free”. You still need your job to live, but if you lose it, you’re fine for a while and can reasonably get a new job.

The size of your emergency fund will vary depending on what your monthly expenses are, but for an average person who spends $3000 a month, your fund should be around $18,000 – $24,000.


You’ll know that you’ve accomplished this milestone when your emergency account is 6-8x your monthly expenses.

Passive Income (Financially-free)

This milestone is where most people stop. It is achieved when your monthly passive income surpasses your monthly living expenses. Basically, you can quit your job tomorrow and you’ll be able to survive for the rest of your life.

There are various ways to build passive income but a few popular ones are:

  • Pension income (this one is slowly going out of style as more and more companies stop offering pensions. Plus, do you really want to work 40 years to achieve financial freedom?)
  • Dividend income (something which a ton of the FIRE community partake in)
  • Real estate rental income (probably the most hands-on form of income, but also the most rewarding, if you can get it right)

When the money you receive passively surpasses the money you need to spend, you’re financially free! Once you hit this goal, you can ease your foot from the pedal, pat yourself on the back, and relax for a bit as you’ve “made it.” You’ve successfully escaped the rat race.

For an average family that spends $5000 every month, realizing this goal means receiving over $5000 a month in income which you don’t need to work for. If you’re investing in dividend-paying stocks to build your passive income, this means having over $1,200,000 in 5% dividend stocks.


You’ll hit this goal when your monthly expenses can be covered fully by your passive income. (or when you have enough of a nest egg that you can safely withdraw money every month which covers your monthly expenses.)

Mega Nest Egg / Passive Income (Life-free)

For most people, being financially free is enough so most people stop once they reach the milestone. BUT, for the super-ambitious, they want more out of life. If you’re part of this group, you might be thinking “ok having enough passive income to cover my monthly expenses is great, but what if I want to travel? or buy a car? or buy a boat? then that puts a hole in my plan.”

For those people, I’ve introduced a final financial milestone which I like to call life-free. Basically, you can do (almost) whatever you want in life because of your massive nest egg and/or massive passive income streams.

This is going to vary vastly from person to person. For the person who just wants to travel the world every year, their “life-free” number might be $5 million. For the person who wants to live on a prestige golf course and travel in their own private jet finding new things to do in Kihei Maui every year, their “life-free” number might be $100 million.


You’ll hit this financial milestone when you can buy (almost) anything you want.

Make Money, Save Money, Invest Money

abundance bank banking banknotes; Financial Milestones for Students
Financial Milestones for Students

There you have it. 4 financial milestones for students (and really anyone) which will keep you both hungry for more, but also motivated to keep working towards your personal finance goals.

Everyone will have different goals and no two people are the same. That being said, the way to reach these goals revolve around a few key guiding principles:

  • Get rid of bad debt (and stay out of it)
  • Make more than you spend
  • Invest the difference in passive incoming generating (and/or growing) assets

How fast you achieve your own financial goals really depends on how much money you can make, how many expenses you can cut, and how smart your investment choices are.

Happy wealth building everyone 🙂


Thanks for reading through Financial Milestones for Students and thank you for following along! If you’re a Canadian Student, check out the Ultimate Canadian Student’s Guide to Personal Finance! To learn more about me, head over to this link here. If you want to get exclusive updates and tips, drop your email in the “get updates” box (might have to scroll up a bit.) Let me know your thoughts and suggestions in the comments!


  1. Great post Jeff! Only thing that I might disagree with is paying off debt before you start an emergency fund. If you don’t build an emergency fund first, unexpected things will come up and you’ll have to go back into debt to cover them.

    1. Yes, while this is true, the longer you are in debt, the more it grows and the more you owe, making it harder to get pay off. I feel like it is somewhat possible to start both, but the debt should definitely be a priority.
      Plus, IDK how much of a passive income dividends can be, considering how risky the stock market can be.

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